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it to Ms. Felton, instructing her to sign it and mail it to the
Internal Revenue Service. The IRS never received it.
Petitioner filed its Form 1120, U.S. Corporation Income Tax
Return, for the calendar year 2002 on January 13, 2004.
In the notice of deficiency, respondent determined that
Regina Felton, PC is a qualified personal service corporation
subject to a special flat income tax rate of 35 percent.
Petitioner filed a petition with the Court challenging
respondent’s determination, stating:
I operate a law office as a sole practitioner. For the
years 2001 and 2002, it is alleged my taxes were
calculated improperly. The Revenue Agent advised that
pursuant to IRC 448(d)(2), IRC 11 and 3121(d), the
company should pay a “flat tax” of 35%. My accountant
disagrees. The recalculation of the tax under the flat
tax causes a substantial increase in tax on diminimus
[sic] gross income.
Discussion
For the reasons discussed below, we agree with respondent
and decide that petitioner is a qualified personal service
corporation under section 448(d)(2) and is therefore responsible
for the income tax deficiencies determined by respondent for the
calendar years 2001 and 2002. We also decide that petitioner is
liable for the section 6651(a)(1) addition to tax determined by
respondent for the late filing of its 2002 return.
A. Burden of Proof
Generally, the Commissioner’s determinations are presumed
correct, and the taxpayer bears the burden of proving those
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